Financial education: teaching kids to invest

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(Host) When it comes to handling money, Americans aren’t doing so well. Credit card debt is soaring, savings accounts are shrinking and bankruptcies are at near record levels. And we’re passing these poor spending habits on to our children.

As a result, the responsibility for providing financial education is falling to teachers, as VPR’s Nina Keck reports in the second of two parts on money management.

(Keck) On average, high school students today will earn somewhere over a million dollars throughout the course of their lifetimes. College graduates will earn over a million and a half dollars. That’s the good news. The bad news, according to University of Vermont economics professor Art Woolf, is that few of these students are taught what to do with all that money.

(Woolf) “Where do you save? Where do you invest? How do you invest? What are the appropriate vehicles for investment? What do I invest for? None of those questions are dealt with. So people come out of high school or out of college and they start getting a paycheck and really don’t have too much of an idea of what to do with it. And they make lots of mistakes.”

(Keck) As head of the Vermont Council on Economic Education, Woolf is working hard to change that.

(Woolf) “To a certain extent, talking about money and finances is like talking about sex. You’re supposed to learn it from your parents, but parents don’t talk about it with their kids. You’re supposed to learn it, therefore, in the schools. Schools are teaching it but only in the last decade or so has that started to happen. So I guess we’re farther ahead with sex education than financial education.”

(Keck) While some Vermont schools are beginning to incorporate money management and economics lessons in the classroom, Woolf says overall, the state lags well behind others when it comes to teaching kids about money. Public schools, he says, just don’t have the resources or the time to add more to their already full curricula. And he says teachers, like parents, are often intimidated at the thought of teaching economics and personal finance. The key to changing that, he says, is to work lessons about money into existing curricula – something Woolf promotes in a variety of free teacher workshops.

Back in July, a small group of teachers sat in front of computer screens at Castleton State College. They were learning about a computerized stock market game for kids. Margaret Carusona teaches eighth grade math at Leland and Grey Union High School in Townshend.

(Carusona) “The students are interested in it. They follow it. They listen to the news and they hear that the market is going up and down. And I thought this would be a great way to get them involved in a team situation and do this.”

(Keck) About 3,000 elementary, middle and high school students in Vermont play the game. Students are divided into teams by age and each team begins with $100,00 pretend dollars. Over the course of several weeks, the kids try to make the most money they can by buying and selling stocks. All transactions are logged by computer so at the end of the game period, teams across the state and across the country can compare and compete.

At Lothrop Elementary School in Pittsford, kids run around on the playground during recess. Last spring, while their classmates were jumping rope and playing tag, a team of fifth graders, including 11-year-old Rachel Bombardir, spent part of their recess time talking stocks.

(Bombardir) “I thought it would be a lot more confusing. We lost some money once in a while, and then we, like, sold the stocks that we lost the money from and then we bought more of the better stocks. We checked their graphs and decided if we should buy them when they were low-priced or if they were doing well and companies that we knew about before.”

(Keck) The team chose stocks they were familiar with: Wal-Mart, Yahoo and Coke to name a few. Their strategy seemed to work as the Pittsford students took first place in the state for their age group. Teacher Jan Barsanti coordinated the program.

(Barsanti) “The knowledge that’s imparted by playing the game is enormous. From researching the companies that they choose to put their money in and just watching how that company does with their stock growth. They were so enthusiastic that they would come in during recess and miss the soccer game and miss whatever it was that was going outside to see how their stocks were doing.”

(Keck) Eleven-year-old Rachel Bombardir has taken the lessons of the game to heart and with the help of her grandmother has put real money on the line.

(Bombardir) “Me and my Nonnie we actually did some investing this summer. She had some extra money and we bought some stocks. And she’s kind of asking me for help a little bit.”

(Keck) The other kids on the team say they too plan to invest in the future. For now, however, they say pretend money works just fine and they encourage other kids to give the game a try.

(Bombardir) “Yeah, I know it takes a little bit of your recess time but in the long run it’ll be good because you’ll know a little bit about it. And if you have any extra money you won’t just blow it for something else because you can use it for the stock market.”

(Keck) Teaching kids about money doesn’t have to be complicated. During a history lesson of North America, for example, UVM economics professor Art Woolf, says teachers can talk about early trade between the Native Americans and the colonists and the impact that trade had on various people. From there, he says globalization and modern trade issues can be discussed. Philosophy and ethics can be worked in when talking about different business practices. The important thing, he says, is to get kids thinking about how money works.

Windsor High School Economics Teacher Larry Booker says he’s found guest lecturers to be a great resource.

(Booker) “A lady came in who worked at a bank and she talked to the kids for an hour and they were mesmerized. She talked about credit cards, debit cards, how to control your money and be careful with it and the kids had absolutely no conception of any of it. And it was really great and I think in order to make a good economics class go, you need to tap into the resources of the business community.”

(Keck) Booker says schools need to take advantage of everything they can to help kids understand economics. You plant the seed in the classroom, he says, and then hopefully, the kids go home and start talking about money with their parents – the place where many financial experts believe children should get money management lessons in the first place.

For Vermont Public Radio, I’m Nina Keck.

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